GERMANY - Investors are once again choosing separate providers for portfolio management and fund administration, according to the German investment and asset management federation BVI.
The industry body has pointed out until recently both these services had, in the main, been offered and bought as a "full-service" package, but that setup is now changing.
"Over recent years, new investments by institutional clients are almost exclusively going into models in which administration and portfolio management are awarded to different providers," the association noted today.
As investors demand higher returns and more specialised management, the full-service model had been "challenged", BVI explained in its most recent yearbook.
However, a spokesman for the association pointed out to IPE the trend will not continue indefinitely as some investors will still choose to work with large investment houses offering both services.
The BVI added there also are new requirements on administrators such as more detailed and unified reporting, adding to the workload.
This means chosen administrators, such as Master-KAGs are now asked to combine various Spezialfonds in one portfolio into fund segments to make reporting easier and more comparable.
"Because of the increasing investment needs, for example in the occupational retirement sector, the cooperation with foreign asset managers have increased institutional investors' requirements for prompt reporting modeled on unified guidelines," the BVI suggested.
According to figures gathered from Master-KAGs, the assets under management in such Spezialfonds segments have increased from €160.2bn at the end of March 2005 to €378.8bn by the end of September 2007.
At the same time, the number of individual Spezialfonds has decreased from 4,678 to 4,000.
"But if you combine the unsegmented Spezialfonds and the segments, the number of funds has stayed more or less the same over the last years", BVI noted.
Indeed, the spokesman is convinced Spezialfonds are now more attractive than ever as efficient investment vehicles for institutionasl investors as new regulations were introduced earlier this year to liberalise constraints and provide more flexibility, and increase competition with Luxembourg funds.
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